Dhaka, Bangladesh (BBN)– The inflow of remittances crossed US$7.50 billion in the first five months of the current fiscal year (FY) as the government started providing incentive to the beneficiaries against inward remittance.

Depreciating mode of the local currency against the US dollar has also pushed up the flow of inward remittances in the recent months, bankers said.

They also expected that the ongoing upward trend of inward remittance may continue in the coming months as the government has announced 2.0 per cent incentive for remittance receipts.

The government had already allocated BDT 30.60 billion as incentive in the budget for the FY ’20 to encourage the expatriate workers to send their money through legal channels.

The flow of inward remittances rose by 22.57 per cent to US$7.71 billion during the July-November of FY 2019-20 from $6.29 billion in the same period of the previous fiscal.

Talking to the BBN, a senior official of the Bangladesh Bank (BB), said expatriate Bangladeshis are being encouraged to send their hard-earned money through the formal banking channel, instead of the illegal “hundi” system for availing such incentive.

The money sent home by Bangladeshis working abroad amounted to $1.55 billion in November 2019, down by $ 84.40 million from the previous month’s level, according to the BB’s latest data.

In October last, the remittances stood at $ 1.64 billion. It was $1.18 billion in November 2018.

The finance ministry has already released BDT 15.30 billion as incentive for remittance receipts for first six months of this fiscal and remaining BDT 15.30 billion will be released later.

He also said such higher inflow of remittance will help the government mitigate the balance of payments deficit.

“Depreciating mode of the Bangladesh Taka (BDT) against the US currency has also helped increasing the flow of inward remittance in the recent months,” a senior executive of a leading private commercial bank (PCB) explained.

The exchange rate of Bangladesh Taka (BDT) depreciated significantly against the US dollar in the recent months mainly due to higher demand for the greenback for settling the import bills.

Meanwhile, the local currency depreciated by BDT 1.0 against the greenback in the inter-bank forex market from January 02 to November 24.

The greenback was quoted at BDT 84.90 each in the inter-bank market on November 27 against BDT 83.90 on January 02 this calendar year.

The exchange rate of the US dollar also remained unchanged at BDT 84.90 as on December 03.

All private commercial banks (PCBs) received $ 1.19 billion as remittances in November last while the state-owned commercial banks (SoCBs) received $318.61 million, foreign commercial banks (FCBs) $11.40 million, and specialised banks $30.55 million.